Panama Papers to net UK taxman extra £100m

Investigations into the Panama Papers are expected to generate £100m ($140m, €113m) in additional tax, HM Revenue & Customs confirmed to law firm Collyer Bristow.

Panama Papers to net UK taxman extra £100m

Following the leak of the Panama Papers, 66 individuals have been investigated for suspected tax evasion, including a number of high net worth individuals, a spokesperson for Collyer Bristow said.

Further, HMRC has made four arrests and carried out six interviews under caution.

Clock’s ticking

Collyer Bristow is a London-based law firm providing advisory, transactional and litigation services to commercial organisations and wealthy individuals and families.

The spokesperson said that data leaks and breaches such as the Panama Papers often turn out to be a boon for HMRC, enabling it to collect substantial amounts of extra tax.

They said a raft of initiatives have now been introduced following the data leaks and hacks that have increased the pressure on non-compliant taxpayers, particularly those with non-UK assets.

James Badcock, partner at Collyer Bristow, said: “The clock is ticking on non-compliance, taxpayers with offshore assets urgently need to decide if they need to make a disclosure.”

Requirement to Correct

The “requirement to correct” legislation has created a deadline of 30 September 2018 for taxpayers to declare offshore non-compliance.

If this deadline is missed, HMRC can levy fines of between 100% and 200% of the tax due and apply even greater penalties in some cases.

The Collyer Bristow spokesperson said that HMRC will also be receiving a windfall of information about non-UK accounts of UK residents through the new global exchange of information known as the Common Reporting Standard (CRS).

“This will make it harder than ever to hide non-compliant offshore assets,” the spokesperson said.

Reasonable excuse

Badcock said even if taxpayers took professional advice on their tax arrangements, they may not have a reasonable excuse in the eyes of HMRC and the courts.

“Whether or not a taxpayer has been non-compliant, it would be extremely foolish not to go to HMRC before they come to you,” he said.

“The right to privacy, the freedom of the press and ‘stolen data’ are contentious debates. Some of the media are defending legal action in relation to the publication of information contained in the ‘Paradise Papers’.”

Though data may have been obtained illegally, this does not generally stop HMRC from using it to pursue taxpayers for non-compliance, Badcock added.

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